The rise of the freelance economy has disrupted traditional workforce structures, but it also faces challenges around fair compensation, transparency, and unstable work arrangements. Meanwhile, blockchain technology holds promise to address many of these issues through its inherent qualities of decentralization, immutability, and trust minimization. With the rise of the freelance blockchain economy, the future of contract work will be irrevocably changed.
Current Issues in the Freelance Economy
The appeal of flexible work has significantly grown the on-demand workforce in recent years. However, major platforms exert strong centralized control while workers often lack stable incomes or benefits. Despite platforms’ promises to thoroughly screen reliable freelance talent, both contractors and enterprises still frequently encounter problems fulfilling work agreements, scams, and limited options for recourse against large centralized intermediaries. Contractors dealing directly with freelancers may face issues during project execution. Similarly, companies seeking flexibility through these platforms have few options when disputes arise with the intermediaries. Low wages and income inequality persist as platforms extract substantial fees—for example, Fiverr takes 20% of a freelancer’s total earnings including tips and has a lengthy 14-day payment clearance period. Therefore, while the independent workforce has expanded, the power imbalance favors platforms at the expense of workers and clients.
Addressing Freelance Challenges Through Blockchain
Blockchain is able to solve those challenges through its promise of decentralization. While centralized platforms promise a certain level of quality, they do not typically provide the transparency of records or level of transparency that users – both contractors and enterprises – require. Blockchain solutions offer the opposite: transparency of records, smart contracts ensuring instant payments, and decentralized networks that empower both workers and enterprises.
The technology offers solutions through transparency of records. By encoding a worker’s history and verifying their qualifications on a decentralized ledger, enterprises can be reassured that they are indeed hiring a person with the stated expertise. Furthermore, if the hired worker is found to be misrepresenting their qualifications, the negative experience can be recorded on the blockchain, warning other enterprises of any potential risk or scam that individual may attempt.
Blockchain offers significant benefits for freelancers and independent contractors as well. Smart contracts guarantee payment automatically upon completion of pre-defined work. Transactions are also faster and cheaper compared to traditional payment methods. Furthermore, cryptocurrency payments protect workers from inflation. Overall, blockchain has the potential to provide greater income stability and security for the growing gig workforce.
Adoption by Enterprises
Many large corporations and startups already utilize freelance workers for parts of their operations. Now, there is a growting adoption of blacokchain technology in HR departments. As a result, some companies are exploring expanding its uses beyond traditional HR to also maange freelancer pools. Blockchain’s permanent and tamper-proof records can foster trust in freelancers’ qualifications and work history. Enterprises are experimenting with more strategic blending of full-time employees and blockchain-verified contingent specialists to increase organizational agility.
Blockchain, Freelance and the Workforce Development
Blockchain technology allows for transparent and accurate worker profiles to be shared in real-time. This enables enterprises to adopt a dynamic approach to project team assembly. Specifically, a “gig enterprise” model where needed in-house skills can be readily identified while qualified freelance workers can be transparently screened and onboarding in an efficient manner. The goal is to seamlessly match evolving business needs with workers’ diverse and high-quality skillsets – a critical capability as automation reshapes standard job functions. Additionally, blockchain’s skill validation tools create new opportunities for independent professionals to develop their careers through additional training.
Outlook and Future Growth
Blockchain technology shows great promise for transforming how businesses and independent contractors interact in the emerging gig economy. Its ability to securely share data across a distributed network supports innovative new platforms that aim to address current pay equity and reliability issues facing freelancers. As blockchain matures in parallel with the expansion of freelance work, it has the potential to fundamentally reshape how organizations structure work and how individuals participate in the digital economy.
Pioneering projects like Ethlance and Chronobank seek to disrupt traditional intermediaries by facilitating fairer direct compensation via blockchain. Blockchain records credentials, workflows, and transactions on distributed ledgers. This can streamline processes for verification and dispute resolution. It also has the potential to benefit the hiring process. All of these implications could optimize human resource tasks for companies large and small. Continued progress in blockchain technology promises to create more trust and transparency for all participants. This holds promise as the world of work continues to evolve.
Note: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and seek professional guidance before making any investment decisions.
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